U.S. Industrial Production Shows Steepest Drop In Over 70 Years
April 15 2020 - 6:04AM
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With the coronavirus pandemic leading many factories to suspend
operations late in the month, the Federal Reserve released a report
on Wednesday showing the biggest monthly drop in U.S. industrial
production in over seventy years in the month of March.
The report said industrial production plunged by 5.4 percent in
March after rising by a downwardly revised 0.5 percent in
February.
Economists had expected production to tumble by 4.0 percent
compared to the 0.6 percent increase originally reported for the
previous month.
The Fed said the bigger than expected nosedive in industrial
production reflected the biggest monthly decrease since January of
1946.
Manufacturing output led the way lower, plummeting by 6.3
percent in March after edging down by 0.1 percent in February. Most
major industries posted decreases, with the largest decline
registered by motor vehicles and parts.
The report said utilities output also tumbled by 3.9 percent in
March after spiking by 7.0 percent in February, while mining output
slumped by 2.0 percent after sliding by 1.3 percent.
Andrew Hunter, Senior U.S. Economist at Capital Economics, said
the steep drop in production "highlights that while coronavirus
containment measures are primarily slamming the brakes on service
sector activity, the manufacturing sector is also set for a
significant downturn."
Capacity utilization for the industrial sector decreased to 72.7
percent in March from 77.0 percent in February, falling to a rate
that is 7.1 percentage points below its long-run average.
The Fed said capacity utilization in the manufacturing sector
fell to 70.3 percent in March from 75.0 percent in February, while
capacity utilization in the mining and utilities sectors dropped to
86.3 percent and 72.7 percent, respectively.
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